TOKYO Joining the line of Japanese electronics giants to announce steep losses and layoffs, Hitachi Ltd. said Friday (Aug. 31) that it expects to lose about $1 billion in its current fiscal year and to cut 14,700 jobs under a restructuring plan.
The company will also accelerate the shift of its Hitachi Nippon Steel Semiconductor Singapore Pte. Ltd. unit out of DRAM and into system-on-chip devices. The shift had not been expected to happen for two years. Now the transition will occur as soon as Elpida Memory Inc., Hitachi's DRAM joint venture with NEC Corp., reaches full production.
Lowering its revenue projections for this fiscal year by about $8 billion, to $65 billion, Hitachi now expects a net loss of $1.2 billion. Earlier projections had put the loss at $750 million.
The company now projects losses of $792 million for semiconductors, $392 million for displays and $58 million for digital media/consumer electronics products.
Hitachi blamed the losses on declines in the U.S.market. "Despite our earlier expectation of recovery by next spring at the latest," said Etsuhiko Shoyama, president of Hitachi, "now we are afraid that the economy won't recover for another year."
That will force what Shoyama called "a drastic business restructuring." Hitachi expects to cut $1.1 billion in fixed costs, including 14,700 jobs: 10,200 in Japan and another 4,500 overseas. Seventy percent of the job cuts in Japan are expected to be achieved through retirement. Investment in plant and equipment will also drop from $1.2 billion to $500 million. Hitachi plans to cut the number of its fabrication facilities from 19 to 13 and assembly and test sites from 13 to eight.
Analysts suggested the cuts may not be enough. "The emergency measure seems to be halfway," said Yukihiro Yoshida, research analyst at Meiji Dresdner Asset Management Co. Ltd. "What is selected and on what the company concentrates have not been clearly shown."